Size and price metrics

    Enterprise value

    EV

    Enterprise value is the true cost of acquiring the whole business. It adds the debt you would inherit to the market cap and subtracts the cash you would gain.

    Formula

    Enterprise value

    EV = Market Cap + Total Debt − Cash and Cash Equivalents

    Benchmark: Low, zero, or negative EV is a prompt to investigate, not a buy signal

    Reading the number

    Think of buying a shop priced at ₹100. It has ₹20 of cash in the till and owes ₹10 to a friend. Your real cost is ₹100 − ₹20 + ₹10 = ₹90. That ₹90 is the enterprise value.

    EV does two jobs. It prevents blunders, because a cheap-looking market cap can hide a mountain of debt. And it surfaces genuine bargains, because a company holding more cash than its market cap has a negative EV: you pay for the shop and get the till for free. Always check the consolidated figures. On research platforms, toggling between standalone and consolidated can flip EV dramatically, in one case from about −₹2,000 crore to about +₹1,200 crore.

    Indian example

    Related ratios

    Market capitalisationDebt to equity ratioFree cash flow

    Glossary terms

    Go deeper

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